Got salary hike? In-hand pay may not be as much. Here's why.

Your HR just emailed your revised CTC (cost to company). You've been given a handsome salary hike. Time to celebrate? Absolutely. But wait until you check your bank account next month. Because there’s a chance your in-hand pay hasn’t increased by as much as you expected. If you've ever wondered why a 10–12 per cent hike in CTC doesn’t feel like a 10–12 per cent jump in monthly income, you’re not alone. Welcome to the fine print of Indian salary structures. Let’s decode it. 1. You’ve moved to a higher tax slab One of the biggest culprits behind the shrinking paycheck is income tax. In India, we have a slab-based income tax system, which means your marginal tax rate increases with your income. So, if your hike pushes you into a higher slab (say, from 20 per cent to 30 per cent), then a bigger chunk of your new income goes towards taxes, reducing your net gain. Example: If your salary goes from Rs 20 lakh to Rs 25 lakh annually, the 25 per cent CTC hike would actu

This article was originally published on June 20, 2025.